Question

Mohan, Vijay and Anil are partners; their capitals on 31st March 2024, after adjustments of drawings and profits, were ₹ 30,000, ₹ 25,000 and ₹ 20,000, respectively. Profits for the year ending 31st March 2024 were ₹ 24,000. Their drawings were ₹ 5,000 (Mohan), ₹ 4,000 (Vijay) and ₹ 3,000 (Anil) for the year ending 31st March, 2024. Subsequently, the following omissions were noticed, and it was decided to bring them into account.

1. Interest on capital at 10% p.a.
2. Interest on drawings: Mohan ₹ 250, Vijay ₹ 200 and Anil ₹ 150.

Make the necessary journal entry and prepare capital accounts of partners.

Answer 1

Since interest on capitals is always calculated on opening capitals and the same have not been given, first of all, it is necessary to calculate the opening capital:

Particulars	Mohan	Vijay	Anil
Capitals as on 31.3.2024	30,000	25,000	20,000
Less: Share of Profit (Which has already been added) 24,000 shared equally	8,000	8,000	8,000
	22,000	17,000	12,000
Add: Drawings (Which were previously deducted)	5,000	4,000	3,000
Capitals as on 1.4.2023	27,000	21,000	15,000

Interest on Capital:

Mohan = 10% on ₹ 27,000

= ₹ 2,700

Vijay = 10% on ₹ 21,000

= ₹ 2,100

Anil = 10% on ₹ 15,000

= ₹ 1,500

Table showing adjustment
Particulars	Mohan	Vijay	Anil	Total
Interest on opening capitals	2,700	2,100	1,500	6,300
Less: Interest on drawings	250	200	150	600
Balance (Cr.)	2,450	1,900	1,350	5,700
Less: Division of the firm’s loss of ₹ 5,700 shared equally (Dr.)	1,900	1,900	1,900
	(Cr.) 550		(Dr.) 550

 

Journal Entry
Date	Particulars	L.F	Debit (₹)	Credit (₹)
2024
March 31	Anil’s Capital A/c   ...Dr.		550	-
	To Mohan’s Capital A/c		-	550
	(Being adjustment on account of the omission of the interest on capital and drawings.)

 

Dr.	Partner’s Capital Accounts								Cr.
Date	Particulars	Mohan (₹)	Vijay (₹)	Anil (₹)	Date	Particulars	Mohan (₹)	Vijay (₹)	Anil (₹)
2024					2024
March 31	To Mohan’s Capital A/c	-	-	550	March 31	By balance b/d	30,000	25,000	20,000
March 31	To balance c/d	30,550	25,000	19,450	March 31	By Anil’s Capital A/c	550	-	-
		30,550	25,000	20,000			30,550	25,000	20,000